SurgePays - 10-Q quarterly report FY

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: May 31, 2008

File No. 000-52522

(Name of small business issuer in our charter)

(Address of principal executive offices) (Zip Code)

(Former address of principal executive offices) (Zip Code)

Registrant's telephone number: (512) 996-0882

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o Nox

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 10,900,000 shares of common stock outstanding as of May 31, 2008.

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, contained in Mar Ked Mineral Exploration, Inc.’s Form 10-KSB dated November 30, 2007.

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The accompanying unaudited interim financial statements of Mar Ked Mineral Exploration, Inc. (“Mar Ked”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s registration statement filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2007 as reported in Form 10-KSB, have been omitted.

 

 

The accompanying interim financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying interim financial statements, the Company incurred a new loss of $4,165 and $5,365 for the three months and six months ending May 31, 2008 and has a deficit accumulated during the exploration stage of $98,591 as of May 31, 2008. However, Mar Ked has no current source of revenue. Without realization of additional capital, it would be unlikely for Mar Ked to continue as a going concern. Mar Ked’s management plans on raising cash from public or private debt or equity financing, on an as needed basis and in the longer term, revenues from the acquisition, exploration and development of mineral interests, if found. Mar Ked’s ability to continue as a going concern is dependent on these additional cash financings, and ultimately, upon achieving profitable operations through the development of mineral interests.

 

 

On August 24, 2006, Mar Ked issued 5,000,000 common shares valued at $.001 per share for gross proceeds of $ 5,000.

On October 28, 2006, Mar Ked issued 5,000,000 common shares valued at $.01 per share for gross proceeds of $ 50,000.

On October 28, 2006, Mar Ked issued 500,000 common shares valued at $.02 per share for gross proceeds of $ 10,000.

 

 

 

On October 30, 2006, Mar Ked issued 400,000 common shares valued at $ .05 per share for gross proceeds of $ 20,000.

(a) On November 1, 2006, the Company entered into an option agreement to acquire a 100% interest in fifty-eight (58) mineral claims that make up the RB Property located in the Finlayson Lake area in the Yukon Territories in Canada. The costs incurred to date are summarized as follows:

In order to earn this 100% interest, subject to a 3% Net Smelter Return royalty, Mar Ked must make cash payments totaling $ 400,000 and incur minimum work expenditures of $ 875,000 ( or CDN $ 1,000,000) as follows:

If the minimum work expenditures are not met and should the parties mutually agree, then the Company may pay in cash to the vendor 50% of the difference between the actual expenditures and the minimum work expenditure required for that year in a single payment to avoid being in default.

After the third anniversary date, the vendor has the right to buy back a 30% interest in the property by refunding to the Company all of their cumulative work expenditures spent to date on the property. If the vendor exercises this right, then the parties will immediately form a joint venture with Mar Ked’s participating interest being 70%.

The Company may, at any time, purchase up to 1.5% of the Net Smelter Return royalty by paying the vendor the sum of $ 1,000,000.

(b) On May 15, 2008, the Company entered into an agreement to purchase an assignment of rights to acquire a 50% undivided right, title and interest in and to certain mineral claims in the Hatchet Lake region, Canada for consideration of 3,500,000 common shares of Mar Ked and cash in the amount of $ 250,000, and further consideration of Mar Ked assuming all financial obligations to fund the joint venture of the vendor pursuant to an agreement with Maxore Minerals Corp. As at May 31, 2008, no shares had been issued or cash paid related to the transaction.

The Company’s financial instruments consist of cash, amounts receivable, and accounts payable. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency, or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying value, unless otherwise noted.

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.

For the quarter ending May 31, 2008, the Company has financial liabilities of $2,544 CDN ($2,409 US) and financial assets of $ 3,088 CDN ($2,924 U.S).

The Company has accumulated net operating losses for income tax purposes of approximately $98,000 which expire beginning in 2026. The potential future tax benefits of these losses have not been recognized in these interim financial statements due to uncertainty of their realization. A full valuation allowance has been provided for the company’s future income tax assets, as the management of the Company has determined that it is more likely that not that these assets will not be realized in the foreseeable future.

This statement contains forward-looking statements within the meaning of the Securities Act. Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the matters set forth in this statement.

Our plan of operation for the next twelve months is to obtain the funding necessary to identify, purchase and explore mineral claims.

During the twelve month period following the date hereof, we anticipate that we will not generate any revenue. Accordingly, we will be required to obtain additional financing in order to continue our plan of operations. We believe that debt financing will not be an alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our acquisition and exploration program.

We may consider entering into a joint venture arrangement to provide the required funding to acquire and develop yet to be identified mineral claims. We have not undertaken any efforts to locate a joint venture participant. Even if we determined to pursue a joint venture participant, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of any mineral claims. If we entered into a joint venture arrangement, we would likely have to assign a percentage of our interest in any mineral claims.

During the three-month periods ended May 31, 2008 and 2007, we had no revenues. We do not anticipate having any revenues for so long as we are an exploration stage company.

During the three-month periods ended May 31, 2008 and 2007, general and administrative expenses, amounted to $4,160 and $26,747, respectively, and are summarized below:

 

 

During the six-month periods ended May 31, 2008 and 2007, we had no revenues. We do not anticipate having any revenues for so long as we are an exploration stage company.

During the six-month periods ended May 31, 2008 and 2007, general and administrative expenses, amounted to $5,365 and $32,889, respectively, and are summarized below:

 

At May 31, 2008, we had no cash and a working capital deficit of $13,091. Comparatively, we had cash of $1,390 and a working capital deficit of $7,726 at November 30, 2007.

We estimate that our total planned expenditures over the next twelve months will be approximately $85,000. Our cash and working capital will not be sufficient to enable us to locate alternative mineral claims and we will have to pursue additional debt or equity financing.

Cash used for operating activities was $1,390 for the six-month period ended May 31, 2008 and $23,267 for the six-month period ended May 31, 2007. We anticipate that cash used in operating activities will increase in 2008 however; this is dependent upon raising additional capital.

We have funded our business to date primarily from sales of our common stock. From our incorporation on August 22, 2006, to May 31, 2008, we have raised a total of $85,000 from private offerings of our common stock.

As noted in Note 4 of the condensed financial statements, we entered into an agreement to purchase an assignment of rights to acquire a 50% undivided right, title and interest in and to certain mineral claims in the Hatchet Lake region, Canada for consideration of 3,500,000 common shares of Mar Ked and cash in the amount of $250,000, and further consideration of Mar Ked assuming all financial obligations to fund the joint venture pursuant to an agreement with Maxore Minerals Corp. To pursue this venture we will be required to initially raise $250,000 to fund the purchase of the interest and will be required to raise substantially more equity to fund the development.

There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our exploration of the property underlying our mineral claims option and our venture will fail.

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive exploration activities. For these reasons, there is substantial doubt we will be able to continue as a going concern.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned exploration activities.

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This quarterly report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this quarterly report.

 

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.